Stop Youth Addiction Inc. v. Lucky Stores Inc.

torts

Organization can pursue unlawful business practices claim based on allegations of cigarette sales to minors. STOP YOUTH ADDICTION, INC., Plaintiff and Appellant, v. LUCKY STORES, INC., Defendant and Respondent. No. A069422 (Alameda County Super. Ct. No. 743347-6) California Court of Appeal First Appellate District Division Four Filed June 28, 1996
        The trial court sustained the demurrer of respondent Lucky Stores, Inc., without leave to amend. The complaint filed by appellant Stop Youth Addiction, Inc. (SYA) for unlawful business practices was dismissed in its entirety. SYA appeals, contending that a private citizen acting on behalf of the people of this state has standing to seek injunctive and restitutionary relief pursuant to the state unfair competition statute when a business has engaged in an unfair act that also violates a statute. We agree and reverse the trial court order.

I. FACTS ¹
        In November 1994, appellant SYA filed a complaint on behalf of the general public for unlawful business practices against respondent Lucky Stores, Inc., and many others. ² (Bus. & Prof. Code, § 17200.) ³ It brought the action in the public interest as a private attorney general. SYA alleged that Lucky and the other defendants sold cigarettes to minors in violation of state law. (Pen. Code, § 308, subd. (a).) SYA sought $10 billion in restitution to be made to the State of California, an injunction prohibiting the defendants from selling cigarettes to minors, and attorney fees.
        In December 1994, defendants other than Lucky filed a general demurrer contending that the action should be dismissed for lack of standing. The demurring parties contended that Penal Code section 308 provided for exclusive enforcement by public entities and made no provision for a private cause of action. In January 1995, the trial court sustained the demurrer and ordered that the complaint be dismissed as to these defendants.
        In February 1995, Lucky filed its general demurrer to the complaint, on the same ground that prompted the trial court to dismiss the complaint after it sustained the earlier demurrer. The trial court sustained Lucky's demurrer and dismissed the SYA complaint against it in its entirety.

II. STATING CAUSE OF ACTION ⁴
        SYA contends that when a business has engaged in an unfair act that also violates a statute, a private citizen acting on behalf of the people of this state has standing to seek injunctive and restitutionary relief pursuant to the state unfair competition statute. It argues that its complaint alleged facts sufficient to state a cause of action for unfair competition. (See §§ 17200, 17204.) The trial court disagreed, sustaining Lucky's general demurrer for failure to state a cause of action. A demurrer tests the pleading alone, not the evidence or other extrinsic matters. (Ascherman v. General Reinsurance Corp. (1986) 183 Cal.App.3d 307, 310-311; see Code Civ. Proc., § 430.30, subd. (a).) A trial court's ruling sustaining a demurrer is deemed erroneous when a plaintiff has stated a cause of action under any possible legal theory. (Pollack v. Lytle (1981) 120 Cal.App.3d 931, 939.)
        The state unfair competition statute (UCS) defines unfair competition to "mean and include any unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising . . . ." (§ 17200.) "The Supreme Court has repeatedly given the broadest possible definition to the term 'unfair competition.'" (Consumers Union of United States, Inc. v. Fisher Development, Inc. (1989) 208 Cal.App.3d 1433, 1438.) "An unlawful business activity includes anything that can properly be called a business practice and that at the same time is forbidden by law." (People v. McKale (1979) 25 Cal.3d 626, 632, internal quotation marks omitted.)
        Section 308 of the Penal Code makes it a misdemeanor to sell cigarettes to minors. It also makes the seller liable in "a civil action brought by a city attorney, a county counsel, or a district attorney. . . ." (Pen. Code, § 308, subd. (a).) SYA contends that Lucky's sale of cigarettes to minors in violation of this statute forms the basis of its UCS action. Its complaint alleged that Lucky violated section 308 of the Penal Code and that this violation constitutes an unfair business practice within the meaning of the UCS. We accept the alleged facts as true, as we must when evaluating a demurrer. (Saliter v. Pierce Brothers Mortuaries (1978) 81 Cal.App.3d 292, 299; see Hughes v. Western MacArthur Co. (1987) 192 Cal.App.3d 951, 954-955.) Engaging in the sale of cigarettes to minors constitutes an unlawful business activity-a business practice that is also an act forbidden by law. (See People v. McKale, supra, 25 Cal.3d at p. 632.) Such an unlawful business activity is prohibited by the UCS. (See § 17200.) Given the broad reach of "unfair competition" under the UCS, we are satisfied that SYA has stated the elements of a cause of action for unfair competition sufficient to withstand a general demurrer.

III. STANDING
        We must also determine whether SYA has standing to sue under the UCS. SYA contends that the UCS permits it to file a private cause of action to enforce this statute. Lucky challenged this assertion in its general demurrer. Determining the issue of standing to sue under a statute turns on the construction of the statute and thus presents a question of law. (Dean W. Knight & Sons, Inc. v. State of California ex. rel. Dept. of Transportation (1984) 155 Cal.App.3d 300, 305.) As such, we review this matter anew on appeal. (See People v. Louis (1986) 42 Cal.3d 969, 985.)
        The UCS provides that enforcement actions may be brought by the state Attorney General, any district attorney, any city attorney, a city prosecutor "or by any person acting for the interests of itself, its members or the general public." (§ 17204.) These UCS remedies are intended to be cumulative to those available under other laws. (§ 17205.) SYA's complaint alleges that it acts on behalf of the general public. SYA argues that it brought its UCS suit as a private attorney general.
        We find that SYA had standing to sue pursuant to the UCS. Courts have repeatedly permitted persons who were not personally aggrieved to bring suit for injunctive relief under the UCS on behalf of the general public, in order to enforce other statutes under which such parties otherwise lacked standing. (Consumers Union of United States, Inc. v. Fisher Development, Inc., supra, 208 Cal.App.3d at p. 1440 [UCS action to enforce Unruh Act].) Our Supreme Court has held that the lack of express authorization for an official to prosecute a violation of state law does not preclude prosecution of an action pursuant to the UCS. (People v. McKale, supra, 25 Cal.3d at p. 633 [district attorney enforcing Mobilehome Parks Act].) Our Supreme Court has held that it is "immaterial" that the state law allegedly violated did not expressly provide for private enforcement. (Committee on Children's Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 210-211 [enforcement of state Food, Drug and Cosmetics law].) When an action to enforce another state law is brought pursuant to the UCS, the operative statute is the UCS, which allows a private action to redress any unfair competition in violation of that statute. (Ibid.) Thus, SYA has standing to sue under the state UCS to enforce section 308 of the Penal Code.
        Lucky counters that the Legislature did not create a private right of action by section 308 of the Penal Code. This argument and Lucky's exhaustive analysis of what it finds to be the legislative history of that provision appear to us to be "immaterial." The California Supreme Court instructs us that the operative statute for purposes of standing to sue is the UCS, not the underlying statute. (Committee on Children's Television, Inc. v. General Foods Corp., supra, 35 Cal.3d at pp. 210-211.) ^{5 1  2  3  4  5}  CONCLUSION

        The order sustaining the demurrer and the judgment dismissing the action are reversed.


We concur:
        Anderson, P.J.
        Poché, J.


Trial court:
        Alameda County Superior Court

Trial judge:
        Hon. Ken M. Kawaichi

Counsel for appellant:
        Donald P. Driscoll, Esq.
        William M. Henley, Esq.

Counsel for respondent:
        Gibson, Dunn & Crutcher
        Gail E. Lees, Esq.
        Lincoln D. Bandlow, Esq.

        1. Some of these facts are gleaned from the record in a related writ, Thriftway Dixie, Inc. v. Superior Court (case no. A069132), which was dismissed on May 31, 1996 as moot. These two cases were once consolidated, but were effectively severed by the dismissal of the petition. A demurrer assumes that all properly pleaded facts are true. (See Thompson v. County of Alameda (1980) 27 Cal.3d 741, 746; Cutter v. Brownbridge (1986) 183 Cal.App.3d 836, 841.) It does not admit contentions, deductions or conclusions of law or fact. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318; Building Industry Assn. v. Marin Mun. Water Dist. (1991) 235 Cal.App.3d 1641, 1645.) The facts of this opinion are thus based on the allegations of the complaint.
        1. In May and June 1995, a dismissal of the underlying action was entered except as it pertained to Lucky. Thus, while there may have been other respondents at one time, only Lucky now remains as respondent.
        1. All statutory references are to the Business and Professions Code unless otherwise indicated.
        1. Lucky's request for a stay of this appeal pending the California Supreme Court's resolution of Reese v. Payless Drug Stores Northwest, Inc. (1995) 43 Cal.App.4th 1317 (review granted Aug. 17, 1995 (S046829)), was denied May 31, 1996. This case raises issues similar to those involved in Reese.
        1. Lucky's only response to Committee on Children's Television, Inc. v. General Foods Corp., supra, 35 Cal.3d 197 is to characterize the holding as dicta. Lucky is wrong. The court held that any inquiry into whether the underlying statute provided a private right of action was "immaterial" because "any unlawful business practice may be redressed by a private action charging unfair competition" under the UCS. (Id. at pp. 210-211.) In short, Lucky wants us to make the inquiry that our Supreme Court has expressly held is "immaterial." We are precluded from doing so. (Auto Equity Sales, Inc. v. Superior Court (1962) 57 Cal.2d 450.) We finally observe that Committee on Children's Television, Inc. has been the law since 1983. Had the Legislature intended to change the law and restrict application of the UCS to those situations where the underlying statute expressly provides for private enforcement, it has had ample time to do so. It has not done so.


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